Dollar rebounds, Asia stocks gain as N.Korea missile fears recede

The dollar rebounded from a 2-1/2-year low on Wednesday, and Asian stocks took their cue from Wall Street’s stronger close, as concerns about North Korea’s firing of a missile over Japan ebbed.

European stocks are also set for a positive start, with financial spreadbetter CMC Markets expecting Britain’s FTSE 100 to open up 0.35 percent. Germany’s DAX and France’s CAC are expected to begin the day 0.5 percent higher.

The dollar index, which tracks the greenback against a basket of six major peers, edged up 0.1 percent to 92.332.

The dollar rose 0.1 percent to 109.79 yen. On Tuesday, after slumping to a 4-1/2-month low versus the safe haven currency, the greenback closed up 0.5 percent.

The yen tends to benefit during times of geo-political or financial stress because Japan is the world’s biggest creditor nation and there is an assumption that Japanese investors will repatriate funds in a crisis.

“Calmer heads have prevailed once again in financial markets, with traders seemingly happy to cover short positions and add a touch of risk into their portfolio,” said Chris Weston, chief market strategist at IG in Melbourne.

The South Korean won strengthened 0.4 percent, with the dollar buying 1,122.2 won, recovering some of Tuesday’s 0.6 percent slide.

The United Nations, in a statement drafted by the United States, condemned the North Korea’s latest missile launch but held back any threat of new sanctions against Pyongyang.

Markets appeared to have dismissed North Korea’s statement on Wednesday that the test was a first step in military action in the Pacific to “contain” the U.S. territory of Guam.

North Korean media reports on the launch lacked their usual claims of technical advances, indicating the test may not have succeeded as planned.

Currency traders are now looking to U.S. non-farm payrolls data for August, due on Friday, following data that showed U.S. consumer confidence surged to a five-month high in August as the labour market improved and house prices rose.